Cybernetic approach to selecting models for simulation and management of investment portfolios

The theory of investment portfolios is a well defined component of the financial science. And while sound in principle it faces some setbacks in its real-world implementation. The authors state that cybernetics present an unorthodox “new” way of studying the process of portfolio management. First, the known theory is translated in cybernetic terminology. Second, various known models of investors are competed systematically on a unified data track. Third, by heuristic restructuring new models of investors may be assembled, which in turn are to be competed as well. As a result, a rank list of known and newly synthesized models of investors emerges through a process of multi-stage selection procedure. This paper represents a general overview of the concept.